EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

04.19.10

The SEC is Going After Microsoft (Again), Not Just Goldman Sachs

Posted in Finance, Fraud, Microsoft, Search, Steve Ballmer at 6:49 am by Dr. Roy Schestowitz

US Securities and Exchange Commission Seal

Summary: The SEC (U.S. Securities and Exchange Commission) contacts Steve Ballmer regarding oddities in Microsoft’s latest financial report

WE WISH to begin with factual background that a lot of people are unaware of. A few months ago, right around the time that Microsoft's CFO quit he was also paid millions of dollars by Microsoft to keep his mouth shut. This is not a standard transaction. This could indicate malpractice and there is reason for prejudice because the SEC previously caught and investigated Microsoft for financial fraud (Microsoft eventually settled), after a Microsoft employee, Charles Pancerzewski, had blown the whistle and presented to the judge convincing evidence of fraud taking place at Microsoft. Microsoft paid Pancerzewski millions of dollars to shut him up and eliminate his evidence [1, 2]. It’s a typical maneuver from Microsoft, which also hires/pays critics to walk away and not share their knowledge with the public. We gave several examples of this before.

A few days ago we wrote about Microsoft’s close relationship with US banks/the Fed, which are aflood with misconduct these days. They contact Microsoft for help brainwashing the public [1, 2, 3, 4, 5, 6, 7, 8, 9], as we noted some days ago when we wrote about the SEC suing Goldman Sachs for fraud. For those who have not read that previous post, Microsoft’s CEO was asked to create a seasonly game to teach the public about deficit crunching (Microsoft too has debt) and as this new article shows, using games to brainwash minds is not out of the ordinary (war games are the most famous example).

PepsiCo International and Microsoft have teamed up to create an integrated digital advergaming campaign to take advantage of what’s expected to be increasing interest in soccer as the World Cup gets underway.

But anyway, here is the interesting development. Pogson has found this document [PDF] buried inside the SEC’s Web site. Since it is available as a PDF, we decided to append it at the bottom as plain text. Microsoft’s response is an HTML-formatted mail and here is what Pogson makes of it:

Then, in the last quarterly report, M$ combined that other OS and “live” segments. I guess they thought a zigzag in the curve would hide something like the inflection in the client OS stuff. Further, internally, they use a different set of books, omitting some important details. So, investors should be comforted knowing that internal decisions are made on false assumptions. We have known for years that including the browser in the OS was done not for good business reasons but to exclude competition from the market. I guess that other search engine is more of the same.

There is actually more to it because Microsoft is ‘embellishing’ its numbers by deferring revenue, for example [1, 2, 3, 4]. One writer asks about Microsoft: “Are we seeing a revival?” Well, only if Microsoft’s lies are being believed because in the previous quarter just about any business unit at Microsoft was down. Yes, it was mostly down, but Microsoft claims a surge.

Let me be clear. I’m not a fan of Microsoft (NASDAQ:MSFT). I dislike its products and I don’t much like its business policies. I’m a child of the open source world and a fan of cloud computing, and Microsoft has long been a dirty word as far as I’m concerned. It’s probably a dirty word as far as many investors are concerned.

Wallstcheatsheet.com, which is another news site, has just published the article “Proof Microsoft has Become Irrelevant” and it says:

If this keeps up [for Bing] , Microsoft may want to rename it ‘Ding’ because that’s how big an impact they’ve had in the search space.

For the moment, Kin and Bing are not making huge waves.

We wrote about it in the previous post. Bing as a “success” is part of an illusion Microsoft is spreading and Kin is a major disappointment which we’ll address in the next post. There is more to Microsoft’s financial reports than meets the eye. Don’t believe what you see next week when Microsoft releases another report and immediately spins it as “success”. Microsoft is not honest about its financial situation.



Mail Stop 4561
                                                             December 11, 2009
Mr. Steven A. Ballmer
Director and Chief Executive Officer
Microsoft Corporation
One Microsoft Way,
Redmond, Washington 98052-6399

        Re:    Microsoft Corporation
               Form 10-K for the Fiscal Year Ended June 30, 2009
               Filed July 30, 2009
               01-14278

Dear Mr. Ballmer:
        We have reviewed the above-referenced filing and have the following comments.
Please be as detailed as necessary in your explanation. After reviewing this information,
we may raise additional comments.

        Please understand that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing. We look forward to working with you in these respects. We
welcome any questions you may have about our comments or any other aspect of our
review. Feel free to call us at the telephone numbers listed at the end of this letter.
Form 10-K for the Fiscal Year Ended June 30, 2009
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Segment Product Revenue/Operating Income (Loss)
Online Services Business, page 25

1.      We note that the operating loss for your Online Services Business increased by
        102% and 84% in 2008 and 2009, respectively, and is a significant portion of your


Mr. Steven Ballmer Microsoft Corporation December 11, 2009 Page 2 consolidated operating income in 2009. Tell us whether these increasing losses are indicative of future results and the consideration given to identifying and quantifying any related known trends, events and uncertainties that would reasonably be expected to have a material impact on your liquidity, capital resources and/or results of operations. Refer to Item 303(A) (3) (ii) of Regulation S-K and Section III.B.3 of SEC Release 34-48960. Item 8. Financial Statements and Supplementary Data Note 22. Segment Information and Geographic Data, page 77 2. Tell us what consideration you gave to reporting revenue from external customers for each of your products and services or each group of similar product and services in accordance with paragraph 37 of SFAS 131. 3. You indicate that your financial reporting systems provide more than one measure of segment profit and loss for management to operate the business, including internal profit and loss statements prepared on a basis not consistent with U.S. GAAP. Tell us what consideration you gave to reporting the segment information that is most consistent with that used in your consolidated financial statements. In this regard, we note that the segment information provided beginning on page 23 is presented in accordance with U.S. GAAP. Refer to paragraph 30 of SFAS 131. 4. We note your statement that segments are not designed to measure operating income or loss directly related to the products included in each segment, due to your integrated business structure. Further explain this assertion and tell us what operating costs are excluded from each segment. In light of this apparent limitation of the data, indicate how the segment information presented is reliable and relevant to users of your financial statements. 5. You state that “inter-segment cost commissions are estimated by management and used to compensate or charge each segment for such shared costs and to incent shared efforts.” Clarify for us what is meant by these estimated inter-segment cost commissions and tell us what consideration you gave to describing in the note the basis of measuring this allocation. Also, clarify what is meant by allocating cost commission “to incent shared efforts.” Explain your basis for determining the appropriate amounts that will provide motivation and justify why management believes the allocation methodology is reasonable. Refer to paragraphs 25(b) and 29 of SFAS 131. ******* Please respond to these comments within 10 business days or tell us when you will provide us with a response. Please submit all correspondence and supplemental
Mr. Steven Ballmer Microsoft Corporation December 11, 2009 Page 3 materials on EDGAR as required by Rule 101 of Regulation S-T. If you amend your filing, you may wish to provide us with marked copies of any amendment to expedite our review. Please furnish a cover letter that keys your response to our comments and provides any requested information. Detailed cover letters greatly facilitate our review. Please understand that we may have additional comments after reviewing any amendment and your response to our comments. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes all information required under the Securities Exchange Act of 1934 and that they have provided all information investors require for an informed investment decision. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that: • the company is responsible for the adequacy and accuracy of the disclosure in the filing; • staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and • the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Corporation Finance in our review of your filing or in response to our comments on your filing. You may contact Melissa Walsh, Staff Accountant, at (202) 551-3224 if you have any questions regarding comments on the financial statements and related matters. If you need further assistance, you may contact me at (202) 551-3226 Sincerely, Craig D. Wilson Sr. Asst. Chief Accountant

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

2 Comments

  1. your_friend said,

    April 21, 2010 at 6:55 pm

    Gravatar

    It’s about time the SEC got on Microsoft and their letter is quite a slap down on the usual monkey business. Well done, SEC, please follow up.

  2. uberVU - social comments said,

    April 25, 2010 at 9:21 am

    Social comments and analytics for this post…

    This post was mentioned on Identica by schestowitz: The #SEC is Going After #Microsoft (Again), Not Just #GoldmanSachs http://ur1.ca/vvaf #finance #fraud #regulation #steveballmer…

What Else is New


  1. New EPO Protests Amid Nervous Breakdowns of Spanish EPO Employee (After Institutional Bullying by Battistelli's Goons), Spain Rejects the Unitary Patent (UPC)

    In the face of enormous pressure from non-technical Eurocrats like Battistelli, Spain remains strong and resists the Unitary Patent Court (UPC), which puts more power in the hands of an abusive body that grossly discriminates against Spaniards



  2. Only Half a Dozen Cuban Patents Filed at EPO, But Hugely Unpopular Battistelli Goes to Cuba to Garner Cheap Support

    Now that Spain is antagonising the EPO (and especially the UPC) the President of the EPO helps create some puff pieces in Spanish as he visits Cuba and neighbouring Spanish-speaking nations which are historically renowned for defunct governance and lawlessness (like the EPO itself)



  3. Nepotismo de la UPC, Abusos Políticos, y el Envolvimiento en la UPC de la Firma ¨Legal¨ que la OEP Contrato para Matonear a Techrights

    La Corte Unitaria de Patentes UPC, un sistema arregaldo esta siendo embestida por la gargant de Europa por la OEP. (Nos están metiendo la yuca). Sus grandes clientes (incluso extranjeros), con sus abogados de patentes para que todo el mundo los vea.



  4. Miembro del Parlamente Europe Resalta ¨Las Continuas Violaciones de los Fundamentales Derechos de los Empleados de la OEP¨

    Pregunta a la Comisión Europea de parte de la MEP Portuguesa Ana Gomes, publicado en el sitio del Parlamente Europeo.



  5. Links 11/2/2016: LibreOffice 5.1, HMRC and FOSS

    Links for the day



  6. Microsoft Continues to Use Software Patents to Extort/Blackmail Even More Companies That Use Linux, Forcing/Coercing Them Into Preinstalling Microsoft

    Acer is the latest large OEM to have become a victim of Microsoft's witch-hunt against Android/Linux preloaders, whom Microsoft is coercing into becoming Microsoft's carriers (or face litigation over software patents, with high legal fees if not injunctions or high damages upon secret settlements)



  7. EPO Brain Drain (Even Directors Fed Up With Team Battistelli) and Rumours About Battistelli Becoming President of the UPC

    Words heard through the grapevine of the European Patent Office (EPO), where staff is overwhelmingly against the managers and some people, including high-profile staff, add to the exodus



  8. More Than 20 Years in the Line: European Patent Office and Claims of European Convention on Human Rights Infringement Against Applicants/Stakeholders

    Gross incompetence and potentially an infringement of the European Convention on Human Rights at the European Patent Office (EPO), this time impacting an applicant (one of many in a similar position)



  9. UPC Nepotism, Political Abuses, and UPC Involvement From the Legal Firm That EPO Hired to Bully Techrights

    The Unitary Patent Court (UPC), a rigged system that is being rammed down Europe's throat by the EPO, its big clients (even foreign), and their patent lawyers laid bear for people to see



  10. Member of European Parliament Brings Up “Ongoing Violations of the Fundamental and Employment Rights of the Staff of EPO”

    Question to the European Commission from Portuguese MEP Ana Gomes, as published in the site of the European Parliament



  11. La Oficina Europea de Patentes Pretende que No Pasa Nada y Prepara una Feria de Vanidad

    La estrategia de relaciones públicas de la OEP cuya destructiva estrategia de patentes continua sin disminución (por ahora), se engancha en Colombia y se esfuerza en manufacturar el mito donde el público, examinadores de patentes, y aplicantes de patentes todos estan muy felices con la OEP.



  12. La ‘Internacional’ Commisión de Comercio Impone/Reenfuerza Patentes de Software para Establecer Otro Embargo

    La Comisión Internacional (sic) de Comercio se esta entrometiendo en competición de nuevo permitiendo a un gigante de los Estados Unidos Ciso en este caso, a potencialmente bloquear rivales (no importaciones del extranjero) usando patentes de software.



  13. Links 9/2/2016: Linux in Robotics, Hyperledger Project

    Links for the day



  14. Besieged Benoît Battistelli Mimics 'Damage Control' Tactics of FIFA or Blatter as More Judges Start Getting Involved in EPO Scandals

    Rumours and a new rant from Battistelli reinforce suspicions that actions are being organised behind the scenes, possibly as part of an upcoming, high-level campaign to unseat/dethrone Battistelli, who has become a reputational disaster to the European Patent Office (EPO), much like Sepp Blatter at FIFA



  15. Several Political Parties Directly Challenge the European Patent Office for Ignoring the Law, Not Obeying Court Orders

    Politicians make it crystal clear that the EPO, despite its unique status, cannot just raise its nose at the rulings of courts of law, definitely not in Dutch territory where the EPO operates



  16. Even the Legal Community is Upset at Benoît Battistelli for the Damage He Did to the EPO

    A recent article from lawyers' media (in German) speaks of the great damage (or mess) left by its current president, who has become somewhat of a laughing stock and growingly synonymous with farcical trials even in the circles of stakeholders, not just his own staff



  17. EPO Union (SUEPO) Getting Busted: “More and More People are Joining the Union, but Fewer and Fewer People Dare to Take on Leading Positions There.”

    The union-busting actions taken by EPO management in collaboration with Control Risks (for weak accusations against staff representatives) and FTI Consulting (for 'damage control') as described in a recent article, in the words of SUEPO lawyer Liesbeth Zegveld



  18. Microsoft's Copyrights- and Patents-Based Attacks on GNU/Linux Carry on

    The SCO case is still going on and Microsoft has just signed a patent deal with GoPro over its FOSS-based software, relating to “certain file storage and other system technologies”



  19. The EPO's Benoît Battistelli is the Dictator Who Can No Longer Dictate Like He Used to

    The European Patent Office's mechanism of oversight is starting to work just a little because, based on a new report from Juve, Battistelli is now reluctant to make proposals that would prove unpopular among delegates



  20. La Más Detallada Explicación (hasta ahora) de ¿Qué esta mal con la OEP?

    La insistencia de la OEP que permanece arriba de la ley no sólo est bajo fuego en los medios pero también esta siendo desafiada basado en personas familiares con la aplicabilidad de la ley a organizaciones internacionales.



  21. Links 8/2/2016: Vista 10 Nags Help GNU/Linux, Nautilus Updated

    Links for the day



  22. The European Patent Office “is Acting as Though the Law Does Not Apply to It.”

    An article from Nieuwsuur which provides the words of Liesbeth Zegveld (for SUEPO) and Guillaume Minnoye (for the European Patent Office), reaffirming the EPO's bizarre notion that it is above the law, even in the face of human rights violations and a court ruling against the EPO



  23. Microsoft-Connected FRAND Lobbying (Software Patents Against Free/Open Source Software) in Brussels

    Anti-Free/Open Source software (FOSS) talking points and FRAND (anti-FOSS) lobbying groups in Brussels as seen by proponents of FRAND, who also worked for Microsoft



  24. Latest Propaganda From the EPO's Management an Effort to Make the EPO the Tool of Megacorporations

    A quick roundup of some of the latest spin and paid-for (bought) coverage that helps introduce a distorted patent system whose beneficiaries are not European (or even people)



  25. 'Aversion to Change' Propaganda From the EPO Echoes or Parrots Lenin and Stalin

    The out-of-control EPO management is trying to fool the media by blaming staff representatives for getting fired, simply because they stood up to a highly abusive and megalomaniacal dictator



  26. The Gates Foundation Subjected to Criticism, But Over a Decade Too Late

    Reckoning and accepting the fact that even some in the media now openly speak about Bill Gates' corrupting influence in everything, including politics



  27. Links 8/2/2016: Zenwalk 8.0 Beta 2, Q4OS 1.4.7

    Links for the day



  28. SIPO (China's Patent Office) Taken Over by Patent Maximalists

    A look at China's race to the bottom (decline in quality) when it comes to patents, assuming quite wrongly that quantity is more important than quality and severe penalties for perceived infringement will spur innovation



  29. The Alice Case Continues to Smash Software Patents (This Time OpenTV's); Will the EPO Ever Pay Attention?

    The potency or the grip of software patents in the United States is quickly eroding, but the EPO continues to act as though software patents are legitimate



  30. EPO Staff Responds to Team Battistelli's Expansion to Include French Economic Propagandist on the Payroll

    With strings attached (like string puppets of Battistelli in various units including the Investigative Unit), can the new Chief Economist, who is French and paid by Battistelli, ever be trusted?


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts